What We Can Learn From Coca-Cola CEO Muhtar Kent’s Op-Ed Apology

“I am disappointed that some actions we have taken to fund scientific research and health and well-being programs have served only to create more confusion and mistrust,” Kent wrote. “I know our company can do a better job engaging both the public-health and scientific communities—and we will.” (The Wall Street Journal)

Not only did Kent not officially apologize, as Market Watch says, but he even manages to promote the company in this comment: “Committed to acting with integrity when serving our customers and our communities, Coca-Cola has always believed that a healthy diet and regular exercise are essential for a healthy lifestyle. As the largest beverage company in the world, we believe that we are uniquely positioned to have a positive impact.”

In fact, Pepsi-Cola ranks higher on the Fortune 500 list than Coke does. Pepsi is 44th, while Coke is 63rd.

However, Market Watch concludes, “readers need to know that Coca-Cola understands why it has been criticized and what behaviors ought to change. Here, expressing disappointment is tantamount to admitting that the company made a misstep in judgment and action, which is a solid beginning to an effective apology.” The above statement does that effectively.

In addition, the Harvard Business Review has an article on its website today about “how to make a corporate apology work.” It quotes two surveys that were published in Organizational Behavior and Human Decision Processes.

In the first study, they looked at how investors reacted to real apologies from executives. They examined 29 online videos of apologies made between 2007 and 2011. Using an established system for distinguishing facial expressions (the Facial Action Coding System, or FACS), their researchers watched each video second by second, without sound, and tracked the expressions that flitted across the executives’ faces. Were they frowning? Smiling? Looking sad? Then Brinke and Adams looked at what happened after the apology to the company’s stock price. They found that for those leaders who had apologized with a smile, the stock dropped—perhaps because the leader seemed insincere delivering his apology, or even seemed to be enjoying the suffering his company had caused. The more the person smiled, the worse his company performed.

For the leaders who appeared genuinely contrite, at first it seemed like there was no impact on stock price—the company neither performed worse, nor performed better. “Normative emotions simply allow the company to move forward,” they write.

But then the researchers took a closer look at CEO apologies, specifically—16 out of the 29 cases. They found that when an apology was delivered by a CEO who looked sad, the company’s stock price actually rose post-apology. “A good apology can build investor confidence,” especially in the long term.

To investigate this further, survey authors Brinke and Adams conducted an experiment in which they hired an actor to portray an airline CEO apologizing for a computer malfunction that canceled 140 flights, stranding thousands of passengers—a scenario based on a real Alaska Airlines snafu. They made sure his fictional apology contained all the verbal elements of a good apology—the components previous research has identified as being central to repairing relationships (see sidebar). They then recruited subjects to watch this fictional CEO apologize—either happily, sadly, or neutrally. When the CEO appeared sad, participants rated him as more sincere and were more likely to want to reconcile with him. When the CEO delivered his apology with a smile on his face—or, interestingly, a neutral expression—the study participants were less likely to trust him, and the apology even seemed to exacerbate their negative feelings.

The lessons here are clear for all CEOs and executives who need to make a public apology. Be sincere, accept blame, and focus on gaining trust by moving forward.

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CEO CONFIDENCE INDEX

Chief Executive’s most recent reading of CEO confidence in future business conditions slipped from 7 out of 10 in October to 6.9 in November. It was a new low for 2018 as business leaders begin to prepare for a possible downturn ahead.

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